WASHINGTON, Feb 4 (Reuters) - The Democratic-led U.S. Senate on Wednesday moved to attract needed Republican support for a massive economic stimulus bill by approving an expanded tax credit for home buyers, as other senators worked on ways to remove spending they say will not heal the economy.

By voice vote, the Senate accepted the housing amendment, potentially adding to the cost of the $900 billion bill that Democratic leaders hope to finish in coming days.

'The stark reality is we need to complete this bill,' said the Senate's Democratic leader, Harry Reid, adding he hoped to pass a bill either on Thursday or Friday.

Senate Republican leader Mitch McConnell, in some of his most upbeat comments since debate began on Monday, praised Reid's handling of the measure and said, 'Sometime tomorrow we'll discuss how we might move toward a conclusion.'

But the legislation is still far more expensive than many Republicans like.

Before attempting to pass the bill, the Senate will likely vote on another housing-sector amendment some Republicans are seeking, which would encourage low-cost mortgages to homeowners. The Obama administration wants to deal with major components of the housing crisis separately, however.

Another amendment, being worked on by moderates from both parties, would drop spending criticized as ineffective and shift some of it to job-creating construction projects. It has the potential to significantly change the bill and might set the scene for more bipartisan support for the plan.

Senate Banking Committee Chairman Christopher Dodd also put the Senate on notice that he would try to use the bill to dedicate $50 billion from a separate financial industry bailout fund for home foreclosure mitigation. His amendment could be debated on Thursday.

Republicans and many Democrats have complained the legislation would not do enough to help the ailing housing sector, which is suffering from deflated prices and mortgage foreclosures.

The amendment approved on Wednesday, which must still be approved by the House of Representatives, could begin to address their concerns. It was offered by Sen. Johnny Isakson, a conservative Republican from Georgia, and Sen. Joe Lieberman of Connecticut, a former Democrat turned independent.

'It is time to fix America's problem, not throw money at the symptoms,' Isakson said.

The amendment would expand for one year an existing $7,500 tax credit for first-time home buyers to all purchasers of principal residences. And it would boost the credit as high as $15,000, or 10 percent of the home price, whichever is less.

NEW SPENDING VS TAX RELIEF

'That's a big one,' a Democratic aide said on passage of the amendment. The aide said it would attract Republican support, but how much remained to be determined.

In a series of votes, the Senate rejected other Republican amendments to significantly cut or eliminate spending projects from the bill in favor of more tax cuts.

About a third of the stimulus package would go to tax relief, with the rest devoted to new federal spending, such as on rebuilding crumbling roads and bridges and helping states pay for health care and education.

Among the spending projects Republicans were objecting to were funds for the 2010 census, federal climate change research and Pentagon purchases of alternative energy vehicles.

Hoping to head off problems over a 'Buy America' plan embedded in the economic stimulus bill, the Senate also voted to soften that language amid fears it would have sparked a trade war. The measure tries to encourage the use of U.S.-made products in construction projects funded by the bill.

Earlier in the day, in his drive to build Republican and Democratic support, President Barack Obama met privately with senators who want to see a smaller, more targeted bill.

'I urge members of Congress to act without delay,' Obama said. 'No plan is perfect, and we should work to make it stronger. But let's not make the perfect the enemy of the essential.' Obama warned the country faced potential 'catastrophe' if Congress did not act quickly.

The Senate spent a third day debating the package, which Obama wants on his desk by Feb. 16, to try to reverse the downward spiral of the U.S. economy with tax cuts, infrastructure spending and other measures.

Obama wants broad bipartisan support for a final bill after the House passed its own, slightly different stimulus plan last week without any Republican votes.

Senate Democratic aides said they would not know how many votes they could count on until they finish considering amendments over the next day or two.

If the Senate approves a bill, that would launch a round of negotiations with the House on a compromise bill that each chamber would have to approve before sending it to Obama for signing into law.